and instructions will follow at that time. As a reminder, this call may be recorded. I would now like to introduce your host for today's conference, Ashley Wilshire, head of investor relations. You may begin.

Thank you and good afternoon. During today's call, we may make forward-looking statements. We would like to remind everyone to carefully review the Safe Harbor language that was published with the earnings release and presentation and in the company's most recent 10K and 10Q, including the risks and uncertainties identified therein. You should keep in mind that any forward-looking statements made by Hancock Whitney speak only as of the date on which they were made. Thank you for joining us. Thank you for watching. The presentation slides included in our 8K are also posted with the conference call webcast link on the Investor Relations website. We will reference some of these slides in today's call. Participating in today's call are John Hairston, President and CEO, Mike Achary, CFO, Chris Ziluca, Chief Credit Officer, and Shane Loper, Chief Operating Officer. I will now turn the call over to John Hairston.

Thank you, Ashley, and thanks everyone for joining us today. The third quarter of 2026 was another solid quarter of profitability, efficiency, and balance sheet growth. Adjusting for expenses related to the acquisition, EPS improved 17% and PPNR grew 8%, both compared to same quarter previous year. We were also pleased to welcome new colleagues and clients to the transaction with One Florida Bank, which closed on August 1. Excluding loans acquired from One Florida, loan growth met expectations at 4% annualized and continued to be funded by growth in core deposits. As shown on slide 8 of our investor deck, loan production was strong and line utilization remained consistent with prior quarter. Growth was driven primarily by a lift in commercial real estate across multiple products and continued growth in equipment finance. Our guidance for the full year remains unchanged at low, double-digit growth. Excluding deposits acquired from One Florida, deposit growth was strong at 9% annualized. Thank you for watching. Thank you for joining us. Efficiency Ratio of 54.46% and an ROTCE of 16.4%. Top line revenue continued to cover significant offensive reinvestment and expenses continued to be well managed. Mike will add additional comments in his remarks, but I will note we have updated our guidance on page 19 to provide both fourth quarter and full year 2026 outlook. As shown on slide 18 of the investor deck, our capital ratios remain strong and reflect capital deployed for both inorganic and organic growth, return to shareholders, and the impact of the rising rate environment. We maintain confidence in our strategy to grow the balance sheet and enhance our operational efficiency. And we remain optimistic about closing out 2026 with continued growth and profitability. Lastly, before we continue the call, I want to take a moment to acknowledge the individuals, businesses, and communities across the Florida Panhandle who were impacted by the recent hurricane. Throughout the storm and afterward, our teams worked diligently to support our clients and ensure they had access to the services and resources they needed. We remain a dedicated partner as recovery efforts continue, backed by the commitment of our team and the resilience of the clients and communities we are very privileged to serve. With that, I'll invite Mike to make additional comments.

Thanks, John. Good afternoon, everyone. As John mentioned, the company's performance in the third quarter was strong. Our adjusted net income was $134 million, or $1.66 per share. compared to net income of $127 million or $1.55 per share in the second quarter. Adjusted for expenses related to the OFB acquisition, PPNR for the company was up 6% from the prior quarter to $189 million. Expressed as a return on average assets, this continues to be a solid 2%. Net interest income increased 7% this quarter. Our fee income businesses continue to perform well and expenses adjusted for costs associated with OFB were up but remain well controlled. The third quarter results reflect all expected one-time expenses related to the OFB acquisition. As expected, our net interest margin was up this quarter with a five basis point increase from 3.56% to 3.61%. Four basis points of the NIM increase resulted from the purchase accounting accretion related to the acquisition. The remaining increase was due to higher earning asset yields of 12 basis points overall. With the higher earning asset yield, we benefited from a higher yield on the bond portfolio and higher average earning asset levels as well as higher loan yields. As expected, the yield on the bond portfolio was up 11 basis points to 3.46% related to the reinvestment of principal cash flows during the quarter. Loan yields were up 11 basis points with a 10 basis point quarter over quarter increase in new loan rates and a healthy increase in average loans of $1.4 billion link quarter or $299 million excluding OFB. The company's cost of deposits was up 12 basis points to 1.55% for the quarter due mostly to increases in promotional rate pricing on our interest-bearing transaction deposits and certain CD maturity buckets, which drove an increase in our balances on those deposits. In turn, the cost of funds was up 8 basis points with lower average other borrowings driving the difference to the cost of deposits. Switching to asset quality, our criticized commercial loans improved for the seventh consecutive quarter, decreasing $7 million to $485 million. Non-accrual loans did increase $19 million to $133 million. Net charge-offs came in at 16 basis points, so flat from the prior quarter. Our loan loss reserves remained solid at 1.42% of loans. We continue to expect net charge-offs to average loans will come at between 15 and 25 basis points for the full year 2026. Finally, on slide 19 of the earnings deck, you'll see our forward guidance for both fourth quarter and full year 2026. We have included one rate hike of 25 basis points in December, but with minimum impact on our expectations. For the full year, we continue to expect loan and deposits to be up low double digits. We revised our guidance on net interest income to be up between 9% and 9.5%, fee income up between 5.5% and 6%, and both operating expenses and PPNR up between 8% and 8.5%. Lastly, a comment on capital. TCE was 8.05%, down 173 basis points from the prior quarter. The largest drivers of that decrease resulted from the cash acquisition of OFB, third quarter share repurchases, and a decrease in OCI. We did repurchase 1 million shares in the third quarter and have another 1 million shares remaining in this year's authorities. Coming into the quarter, the intention was to exhaust that authority during the fourth quarter. However, with the 10-year Treasury at elevated levels and with an unprecedented 82 basis point increase over the course of the third quarter, and with our TCE coming out of the quarter at 8.05%, we'll likely be on the sidelines with additional repurchases until there's a little bit more clarity about where rates go from here. As far as 2027 is concerned, we'll address that with our board in December, but I'd say it's very likely that we'll have some authority in place for next year. I will now turn the call back to John. Thank you, Mike.

Let's open the call for questions.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality, and if you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Michael Rose from Raymond James. Please go ahead.

Thank you for taking my questions. Mike, maybe we can start with the margin. I think you expect some modest improvement. in the fourth quarter on a core basis XOFB. But I did note, obviously, or you guys noted that deposit costs were up. Just trying to get a better understanding of kind of the puts and takes here and, you know, what the potential could be if we do get a rate hike beyond, you know, the 25 that you've modeled in. You know, beta assumptions, you know, all the above. Thanks.

Sure thing, Mike. We'll be glad to. So first off, as far as any rate hikes in the fourth quarter, what we're assuming at this point is the Fed increases 25 in December. So any impact or any increase that late in the quarter really will have a minimum impact, I think, on our numbers for the fourth quarter. Having said that, you know, you guys know that we're modestly asset sensitive and certainly would benefit or will benefit from any increase in rates going forward. Having said that, I think the big drivers as we come out of the third quarter into the fourth quarter is first and foremost our continued ability to organically grow our balance sheet. Certainly the third quarter results were a little noisy, inclusive of OFB, but aside from that, we were able to continue to organically grow the balance sheet. Loans grew 4%, linked quarter annualized deposits. are the better part of 9%. Link Quarter annualized both of those numbers, excluding the impact of OFB. So we would expect that kind of organic balance sheet growth at least to continue into the fourth quarter. So we're having really good success in growing, especially our deposit base. Certainly bringing in new customers and have kind of a nice roster of promotional rates out there that I think have been well received by folks. So we have promotional rates both with CDs as well as money market accounts. And again, as I mentioned, those have been pretty successful and I think have driven the growth that we were able to show in the third quarter and what we're expecting in the fourth quarter. So that's first and foremost. We'll continue to reinvest cash flow coming out of the bond portfolio. At these levels, we were able to reprice at a pretty nice margin. So for example, in the third quarter, we're looking at at least $300 million of principal cash flow coming off at well below 4%. And the assumption is that we'll be able to reinvest that north of 5.5%. So certainly that's a big driver. So we certainly do have higher deposit costs. We were up. in the third quarter compared to the second quarter. And for the fourth quarter, we're assuming probably a similar increase, all things equal. And again, a lot of that is pointed at the promotional rates that I just mentioned. So all those factors combined put us in a position, again, where we're able to grow our average earning assets and produce the levels of NIM expansion and NII that we're looking at for the fourth quarter. You know, for us, modest in expansion is, you know, probably somewhere between three, four or five basis points and then NII growing accordingly. So hopefully that was helpful.

Yeah, lots of impact there. So I appreciate all the puts and takes there. Maybe just as one follow up, how should we think about kind of underlying loan demand and production If we were to get more than another rate hike or two, I mean, is there certain categories, I assume things like construction, maybe commercial real estate, you might see a little slowdown, but then you've also added OFB, which I think has, you know, pretty decent pipelines. So just talk to us about, you know, kind of ongoing levels of production and what that could mean in the context of potentially higher rates than what you've modeled. Thanks.

Yeah, thanks, Michael. This is John. I'll take a swing at that one. First, I mean there are puts and takes even from great increases and as the tenure moves up on the good front it does mean we see less payoffs particularly in commercial real estate so while there is certainly a downside that appetite for new projects could have if rates go up you know let's just say something more significant like like 50 to 100 basis points over the next couple of quarters we'll see a dramatic pullback and payoffs so The net benefit from being asset sensitive should overcome what could be a little lesser production. And as you did mention, we do have the additional resource coming from a pretty goodly number of net new bankers and also the resources that came with a very fine organization, Orlando. So I think our tailwinds outweigh the headwinds just a bit. But since you mentioned sentiment and just kind of how clients feel, I think we've We covered before, Shane's mentioned a couple times on this call, but we do survey our client sentiment, particularly on the business side, pretty frequently, particularly when the macro seems to have headlines that are changing every week or so. And right now the sentiment suggests both resilience and a tone of cautious optimism, simply because the economy is still going quite well. over the last few weeks you could see even though sentiment is cautiously optimistic toward growth those clients are focusing a little more on the cost of energy its impact on overall inflation and the Fed's response to that and so I think it'd be fair to characterize our book is still being cautiously optimistic but a growing focus on on those factors so if a quarter of Every couple, three months is probably not going to be that big a deal. In fact, maybe a little helpful to the bottom line. But obviously, there's always some point where you kind of reach the proverbial squeal point where people begin to pull in their horns. And I think we're a little ways away from that and don't see that happening in Q4. Was that what you needed or you need to redirect one more time?

Yep. No, that's perfect. Thanks for all the color. I'll step back, guys. Thank you. You bet. Thanks, Mike, for the question.

Your next question comes from the line of Ben Gerlinger from Citi. Please go ahead.

Hi. Good afternoon. Hey, Ben. Just wanted to kind of follow up on the funding. I get the repricing aspect. If you look, you guys included the table for OFB. It's on page 10 where balances from beginning of August to the end of September, they grew almost 6% over that If you look at a relative mix of deposits, you guys have drifted a little lower from OFB on their DDA. So instead of like the mid 35, 36, 37%, you're now at 33 on DDA. I'm just kind of curious how you guys think about DDA relative to the mix going forward and kind of juxtapose that against the growth opportunities in the kind of North Florida area.

Great question, Ben, and I'll start, and John can certainly add some color. Obviously, we're very proud and think it's a huge benefit to our balance sheet to have the generous mix of non-interest-bearing deposits that we have. It has fallen off a little bit in the last quarter or so, so we're at the range that you cited. Certainly, some of that is related to OFB coming on. I think their deposit mix is around 22% or so, their concentration of NIBs is around 22% or so. So that will bring us down a little bit. But we do have certain seasonality impacts that impact that part of our deposit portfolio, and especially during the third quarter. So we were down about $200 million end of period in DDA deposits. About a third of that was, I think, related to OFB in terms of their money kind of being redirected elsewhere on the balance sheet, namely into money market accounts, probably taking advantage of the rates that we had there on a promotional basis. The rest of the decline really was seasonal. Another third really related to our commercial and consumer customers, and we normally do see a seasonal impact, you know, in the third quarter, and then certainly public funds. Our public fund deposit book, you know, around $3 billion. mostly interest-bearing transactions but a healthy amount of NIBs. And again, I think you do see kind of those seasonal impacts in the third quarter. So we would expect a fair amount of the DDAs that we lost in the third quarter to come back to us in the fourth quarter. Again, in the fourth quarter, we typically have a seasonal uptick both on the public fund side and the non-public fund side. So John, you may want to chat a little bit about our efforts to grow DDA, though, overall?

Sure, I'll be glad to, Ben. And if we don't cover the detail you're looking for, feel free to ask Ken. But generally speaking, we've been very proud of the componentry of the DDA book. We recognize that as we grow loans at a faster organic pace than we have the last several years, our desire to have more funding puts a little pressure on the mix, simply because these These times our clients are more focused on rate because it's available to them. So there's been a natural bit of flow out of DBAs into IBT's on our book. It's not a loss of deposits. It's really, as Mike called it, a redirect to IBT's. That said, among the cadre of offensive players we're adding, there's a pretty keen focus on adding treasury service folks. We are also in the hunt to create positions that are specifically focused on deposit only. gathering to offer white glove treatment and onboarding operating accounts from a small and medium-sized business. So a little early to tell how successful that's going to be, but while we're adding folks, it's a good time, I think, to add those people that are focused more on deposits. Having said that, when you look at Q3, with a 4% loan growth rate, 9% was more than we needed. We're always glad to have it. Q4 is likely to outpace in deposit growth versus loans again and so we'll enter the year 2027 with a very healthy amount of liquidity alone and so I anticipate we'll keep the foot on the gas with DDA growth and then press a little harder growing loans as we enter into Q1 2027. Was that what you needed or would you like some more detail?

no that was really helpful but you did bring up the people you you've hired and i know you brought up a lot of bankers over the last 12 18 months is is the next focus only deposit focus are these the original people also deposit and you're just also adding kind of the treasury management kind of the bells and whistles associated with fees or lower yielding deposits it's an addition too and and i know this this is maybe too much shop talk but

When we add bankers, those bankers are typically our best reference to the folks who really get it done on the Treasury side. So after a year and a half of pretty acute focus in adding bankers, I think we have a little bit better potential to add Treasury folks that know those folks and know the ones that work well with them. And so we're in the business of identifying those folks and hopefully getting them to join the team. as we move into next year. We've added a few, but not as many as we'd like to, and so that'll be part of the effort. When we get into bankers, the contribution from the hiring plan so far has been pretty strong. And we talk on the call about net new bankers, but obviously there's also a fair amount of trading bankers going on. So when we look at the overall contribution of the new bankers we've added, since the beginning of last year, their contribution is a whopping 55% of year-to-date loan growth in 2026 and 77% of Q3. So with a very efficient portfolio in terms of average carry for each of our bankers, adding those new folks that have some capacity is very meaningful. On the deposit front, that's 19% year-to-date and 15% for Q3. So the mix of a recipe that creates really good profitability and a great balance sheet over the next couple of years, inclusive of DBAs, lies squarely in the quality of the people that we're adding, both on a net basis and where we're simply making trades.

That's helpful. Thank you, guys.

Yeah, thank you, Ben, for the question.

Your next question comes from the line of Will Jones from KBW. Please go ahead.

Yeah, hey, great. Thanks, guys. Good afternoon. Hey, Will. Hey, so I wanted to ask just on growth, you know, when you guys kind of think about the tenets of your growth going forward, it felt like consistency, you know, producing consistency has been a very big focus for you guys. You know, and we kind of saw that again if you strip out OFB in that mid-single-digit range this quarter, you were able to do that in the second and first quarter, you know, and a lot of that is

you know some of the new hiring we're talking about and that new revenue producers but but aside from just those new producers how are you guys creating you know this this culture of consistency you know within more of the legacy um Hancock uh banker set so I'll start and Mike and Chris may want to jump in there too but uh you know the the notion of consistency or said a different way the lack of volatility really extended to everything we wanted to have to reduce volatility in earnings, volatility in provision, volatility in growth, and get to a pretty steady upward momentum on both sides of the balance sheet in NII and fee income and in overall credit. And that was a lot of years of doing a bit of de-risking in the loan portfolio, of adding concentration in markets that were more dependable for organic growth. making sure that we added players to our team that fit our culture. And so the reason our credit folks are involved in the hiring process is to ensure that we have as good a percentage of folks that join the company that match up with our credit risk appetite and with our target operating models for portfolio so that we don't both end up disappointed, us and the prospective associates. So a lot of discipline around hiring. I think the second big part that was helpful there is treating a recruiting of our sales force just like recruiting a client. So there is a pipeline for new associates. There are biweekly calls over who's the best talent we're running to in the markets that we're competing in. And the best people we know to know who our best bankers are across the proverbial street are our bankers that are doing battle and hand-to-hand combat every week in the county. and so I think identifying those was actually very careful. So around the bank there's a coin phrase called the one bank concept. That one bank concept is the collegial operating agreements and then the practice of having that collegial operating style across all of our lines of business and credit. And so whether a person is focused on wealth, on credit, on commercial, on retail, any of those different sectors, While we do follow a line of business architecture, those folks all understand they're on one team. They do a lot of calling efforts together. They prospect together. They review client opportunities together. And so as a result, our competition focus is really more externally pointed, not internally focused when it comes for competition for revenue and for clients. So that concept has worked very well so far. We see that growing and getting more effective and efficient over time, and as we add team members to the bank, the word we hear from them is typically refreshing. So when they join the company, they feel as if no matter what area they come into, they're welcome to a very broad team that's bigger than just their one area of focus in that particular line of business.

Yeah, that's great, John. Thanks for that thoughtful response. Mike, maybe a question for you on deposits. You talked about some of the success you had with some of the promotional offerings. Could you talk to us just about how much you were able to raise through these campaigns, whether you anticipate kind of extending these out over the balance of the year and maybe just general expectations for how that could play into deposit costs over the coming months?

Sure, I'd be glad to. The promotional rate programs, especially on the money market side, were really put into place toward the end of the second quarter. So if you go back and look at the cadence of growth of the second quarter, you'll note that we really had a pretty significant end of period growth. And that was because, again, those campaigns were put in place later in the quarter. So the growth over the third quarter has been a little bit more consistent because we've had those programs in place, you know, really from the get-go of the quarter. And, you know, certainly when you look at our deposit costs and the, you know, kind of the expected data as we have in the materials on slide 15, you know, you can see probably a little bit more of an increase in deposit costs than maybe people are used to seeing from us in an upgrade cycle. And I think, you know, that's completely pointed at the commentary that John shared earlier you know around building liquidity to support loan growth just for the quarter that we're in but for two three quarters down the road and building that customer loyalty and that stickiness of deposits. So it is a little bit of a shift I think in our philosophy around how we look at deposit costs and I think it's been pretty successful so far.

Yeah, okay, that's great color. And last for me, maybe one housekeeping, the decline in tangible book value is maybe a little more significant than we were anticipating. Was there anything unique with OFB marks that happened, or was that really all just kind of AOCI driven?

No, I mean, you know, during the quarter, if you look at TCE and, you know, certainly that plays down to tangible book share, you know, the bigger inputs really was the cash price tag for O.F.B., the buybacks that we did during the quarter, and then the OCI impact. So that was 59 basis points on TCE, 111 for O.F.B., and about 22 in terms of the buybacks. So I think it was just one of those quarters where, you know, a lot of those things just kind of aggregated up together, you know, and drove our TCE down to 805, and then, you know, had the same impact on tangible book value per share.

Yeah, okay. That's fair enough. Just wanted to cross-check that there. Thanks for the questions, guys. Thanks, Will.

Your next question comes from the line of Brett Rabaton from StoneX Group. Please go ahead.

Hey, good afternoon. Thanks for the question. Wanted to ask on the hires. I noticed that the number, I think year-to-date through 3Q on slide 17, shows 38 net new bankers hired. as opposed to 42 last quarter. So I guess I'm just curious if you guys have fine-tuned some of the maybe the legacy lenders slash producers or any thoughts on the link quarter change there to the downside.

Yeah, this is John. I'll answer it. I mean, it's a consistent push for talent. And I mean, right now, I think as of today, pending anything that happened today, we're at 42. Right now, so any given couple weeks span, it may go up or down a few folks as we just go through the normal churn, but that number's 42 right now. I think on the last day of the quarter, it was 38. That's what's in the materials. But our expectation is that we still wrap the year at around 50. And just as a reminder, that excludes the 20 bankers that were added as part of the one Florida gig on August the 1st. So if we can finish the year at or right there around 70, Inclusive of One Florida, I think we'll be pleased with the net growth for the year, particularly given the contribution those folks are making.

Okay. That's helpful. And then just I want to make sure I understood kind of the narrative on the margin going forward versus the increasing cost of funds from here. And if I heard correctly, Mike, it sounded like you're expecting the cost of funds to have a similar trend upward trend. and 4Q than 3Q. Is that a fair assessment? And then just kind of wondering, you know, your cost of funds is pretty low relative to what market rates are. And so I was just curious if there was any thoughts on, hey, maybe the beta might pick up at some point in 27 on the deposit side.

Sure. So, yeah, you're absolutely reading that correctly. So our cost of deposits, I'll focus on that. was up 12 basis points, quarter over quarter. And for the fourth quarter, we're expecting something in that neighborhood, maybe a basis point or two more. And again, that's really a carry forward of the promotional rate programs that I mentioned earlier. And as far as our betas are concerned, again, we have that information in the deck, and those are expectations and approximate ranges. But we would expect to hit those or come pretty close You know, given kind of a normal rate increase cycle. And right now, again, we've got the 125 basis point bump in December. And at this point, I mean, who knows for next year in terms of 27 is concerned. But, you know, overall, we'll benefit from rate increases. You know, we'll see our NIN and NII levels, you know, continue to modestly increase based on that component as well as our ability to consistently grow the balance sheet organically as we kind of mentioned earlier.

Okay, that's really helpful. Thanks, Mike. Thanks for the call.

Your next question comes from the line of Jared Shaw from Barclays. Please go ahead.

Hi, this is John Rowe. I'm for Jared. Good afternoon. Good afternoon. Just looking at the sources of loan growth, and it looks like energy loans are still down. I know that was an area that's been de-emphasized, but just given the backdrop, I'm wondering if either your stance around that segment or customer demand in that segment has changed.

Yeah, is the question about what our posture is on energy growth? Did I hear you right?

Yeah.

yeah no it's I mean look it's it's a it's a great business to be in after we exited RBL and streaming services principally several years ago we really haven't had an appetite to get back in you know never say never but at this point in time that total concentration is well below one percent and it'll probably it'll stay below so in terms of actually growing the loan book what we anticipate the bigger contributors for a fourth quarter to me would be commercial real estate, a pretty good bounce back at C&D given a diminishing payoffs and a lot of new projects coming on, healthcare, and I think we're likely to see a pretty good chunk of C&I come in. A little too early to tell, but October's starting off as expected, but I think we'll finish at the mid-single level for both quarters.

Okay, great. That's helpful. And then thinking about the treasury management business, it sounds like that's becoming even more of a focus. I know that part of what attracted you to the One Florida Bank is their treasury management platform was pretty advanced, I guess, relative to the size. It's just how integrating their platform and strategy into the overall Hancock platform has progressed since the deal closed.

Sure. Glad. This is still John. One, Florida, it's a good observation. As a relatively new bank, they had done a really terrific job building out a treasury function, primarily because they had to. I mean, they're in a hot market. Organic loan growth is terrific. And at the compounded annual growth rate they had, getting a 22 percent free money component and their deposit book with a bank that young was actually quite impressive and so when we look at sort of the core philosophy they have on the treasury offering very similar to ours so there really weren't a lot of differences their technical platforms a little different just given the vendor they chose we don't really anticipate any meaningful difference and finally the only thing that was really a principal difference is they have Given where they operate, they had a pretty mature homeowner association banking that we have adopted and will expand to those markets across our footprint that have some heavy PLA depositories and in some cases HOA borrowing needs. So we are adopting that and integrating that across our company. Okay, great.

Thanks for the call. You bet. Thank you.

Your next question comes from the line of Freddie Strickland from Hobd Group. Please go ahead.

Hey, good afternoon, gentlemen. Just wanted to ask from kind of a 50,000 foot view of the footprint, you know, there's been a lot of headlines about manufacturing and data center, other investments kind of in the center of the legacy footprint in Mississippi and Louisiana. Do you feel like that could change the game for growth in some of those areas or does that seem like it's more incremental at this point?

This is John. Thanks for the regional observation. That's a good free commercial for the call. It is a game changer. I think it's, you know, we're seeing organic growth rates in Mississippi and Louisiana that clearly have ticked upward a good bit. A lot of that work, which is industrial contracting and subcontracting related, has been awarded to local and local-ish players. So it's been very beneficial. I'd certainly hoped that we saw a lot more line of credit related business out of that, but the hyperscalers are very friendly in terms of terms for payment. They typically prepay a pretty good chunk up front on what's expected, and so that's being passed all the way down from the The industrial master providers to the subcontractors. And so as a result, everybody's getting paid pretty timely. And so we're seeing more of an impact on the depository basis than we are the loan basis right now. As those projects begin to come into fruition and go into just care and feeding, that'll probably reverse itself and we see more borrowing opportunities. But the infrastructure ads that are coming along with those projects are clearly a plus up. The tax revenue to the educational system and quality of life provision for the parishes and counties that those data centers are near or in is a windfall for those market areas. And so as a result, we couldn't be happier to see that type of development within our footprint. Hope to take more advantage of it in the future.

Got it. Yeah, maybe the hyperscalers can get the AI to figure out southern accents a little better for giving my name to the AI agent on the call.

Yeah, I think that, you know, the cautionary part is really just, you know, how many of these hyperscalers actually win the race. So we pay close attention to that. I think that's the reason the industrial industry folks have negotiated good payment terms is to ensure that we don't see the types of issues that happen when battery plants were running wide open and then suddenly there was a political change and that stopped quickly. Some of those folks got hung out with problems and that lesson got learned on the hype on the data center construction. So I think they're approaching that much more conservatively and appropriately. So I think the downside looks pretty low. You didn't mention SpaceX, but obviously in Louisiana that's a big project in an area that has not received a whole lot of good tax revenue news, so that'll be very impactful to that part of Louisiana. We welcome that project as well.

I appreciate the color on that. And just one more for me, just wanted to ask about M&A appetite here with the deal closed. I mean, is that something that you're looking at doing, or do you feel like you have enough organic growth opportunity at this point that M&A is not really necessary?

Well, certainly, this is Mike. Certainly the focus continues to be organic balance sheet growth. And, you know, again, we're thrilled with the success that we've been able to enjoy thus far, and certainly the effort and the intensity will continue along that front. As far as M&A is concerned, I mean, we just closed OFB and we have the conversion coming up soon. So those are the things we're focused on M&A wise right now. And aside from that, it's something that we'll continue to look at really through more of an opportunistic lens, I think more than anything else.

All right. Thank you both. Appreciate the call. I'll step back.

Your next question comes from the line of Gary Tenner from D.A. Davidson. Please go ahead.

Thanks. Good afternoon. I had just a follow-up as it relates to the AOCI impact and the buyback. When you announced the One Florida deal, as I recall, it was somewhere around an eight-quarter window to kind of return TC ratios back to where they were. and that was assuming that you utilized the full buyback. Obviously, the AOCI impact changes after the fourth quarter, but could you kind of talk about the timeline in terms of have there been any changes excluding AOCI in terms of kind of growing tangible common equity over the next call it six or eight quarters and as a 9% TCE kind of the assumption we should be thinking about for when you'd be ready or willing to re-engage with the buyback?

Yeah, great question, Gary. So short answer is no, nothing's changed. Coming out of OFB, the intent was, as I mentioned in the prepared comments, was to exhaust the authority of the second half of the year. You know, we bought back the million shares in the third quarter, and the intent coming into the fourth quarter was to do that once again. And the step back is really just related to where longer-term rates have gone. and certainly cognizant of where our TCE is at 805. And all things equal, the preference would be not to let that go below 8%. That's kind of our cultural threshold, if you will. But certainly when we look at common tier one where the OCI is not impactful, we're strong at 1153. Our comfort zone there is probably closer to 12, maybe 12 and a half, and we should be pretty much knocking on the door of a 12% common tier one by the end of the year. As far as TCE is concerned, we think we'll be able to grow that 25, 30 basis points across the third quarter, excluding any buybacks. Again, we're gonna be very cognizant and very vigilant in terms of rates and we'll also be opportunistic. You know, certainly that's something we'll pay very, very close attention to.

Got it. Thank you.

Okay.

Your next question comes from the line of Stephen Scouten from Piper Sandler. Please go ahead.

Yeah, hi. I'm curious with the percentage of SNCC loans where it is now with the inclusion of OSB, if that's something that could be back on the table to help facilitate additional organic growth at this point.

Yeah, thanks for the question. This is John. A great observation. It's down to about 8.6%, I think, for the end of the quarter. It's about $100 million in outstanding slider than the prior quarter. So the big driver in the percentage step down was really just the addition of the denominator coming from when Florida's August 1st closed. So I think it's fair to characterize that as a little bit of a tailwind and that we could grow it inside our self-imposed 10% line of demarcation. That being said, we're not going to run out and try to do a $100 million just because we can. I think right now we're selecting the credits that we feel like match up our yield expectations and our credit risk appetite. I think it's more a matter of we would not curtail the syndications business because of the threshold, because we're so far from it. But at the same time, it's not going to change our credit risk appetite in terms of the premium desires to grow relationship business. But with a pretty strong syndications desk set up, we would not mind enhancing our fee and David Lundgren. So, yeah, it's a little bit more of a tailwind, but I wouldn't look for a wholesale change in our posture.

Understood. That's helpful. And then, Mike, could you speak to any changes and thoughts around the hedging strategy? I noticed there were some more cash flow hedges put on. Was that maybe just opportunistic given the cost of downside protection or just curious on what the ideology is there and how that might impact with rate hikes and the like?

Yeah, so excellent question. So we use our cash flow hedges along with the fair value hedges to kind of control and mitigate some of our asset sensitivity and try not to let that get too outside. So our policies call for certain levels of hedges. And I think what you saw this quarter in terms of us adding a couple hundred million, just kind of right-sizing that to levels that we view to be appropriate for what we're trying to accomplish with the policy and program.

Okay, great. Thanks for the time. Congrats on a great quarter. Thank you much.

At this time, there are no further questions. I would like to turn the call back to John Hairston for closing remarks.

Thank you, Jay, for moderating the call. Thanks everyone for attending on a busy, busy release day. We look forward to seeing you on the road the next several weeks.

This concludes today's call. Thank you for attending. You may now disconnect.